What Do Nonunions Do?
What Should We Do About Them?

by
Daphne Gottlieb Taras, University of Calgary and Bruce E. Kaufman, Georgia
State University
Task Force Working Paper #WP14
Prepared for the May 25-26, 1999, conference
Symposium on Changing Employment Relations and New Institutions of
Representation

September 1, 1999

I. Introduction

We have completed a major anthology Nonunion Employee
Representation (NY: ME Sharpe, 2000), which examines nonunion
representations history, contemporary practice, and policy implications.
In this paper we draw upon 32 chapters on all facets of the topic, both within
the United States and among other countries, including Canada, Japan, Germany,
Australia and the United Kingdom. We review the research findings, and offer
our own conclusions about the desirability of changing American labor laws to
permit employee representation to be practiced overtly by nonunion workers and
by nonunion companies.

We begin with brief descriptions of both the American and Canadian
contemporary public policy settings. The American situation is that the
National Labor Relations Act (NLRA), through Sections 8(a)(2) and 2(5),
places significant constraints on the structure and operation of employee
representation committees in nonunion companies. In particular, the law makes
it an unfair labor practice for a company to operate a dominated labor
organization, where dominated means that the labor organization is
in some way created, supported, or administered by management. The Act
defines a labor organization, in turn, quite broadly to include any
kind of employee representation group that deals with the employer over a term
or condition of employment. Considerable debate has ensued in recent years
whether these strictures in the NLRA impede employee collective voice
and constrain the operation of legitimate, productivity-enhancing employee
involvement programs in nonunion companies. This concern was heightened by the
NLRBs 1992 Electromation, Inc. decision that the company had
violated the NLRA when it established five employee action committees to
work with management on identifying and resolving sources of employee
dissatisfaction with various aspects of pay and working conditions.

Critics of the NLRA (and, to a lesser degree, the Railway
Labor Act) claim that its strictures inhibit the ability of American
companies to form and operate employee involvement and participation programs
in nonunion workplaces and thereby harm both national competitiveness and
cooperative employer-employee relations. For several years running, a coalition
of Republican and conservative Democrats in Congress have sought to enact
legislation, popularly known as "the TEAM Act," which would
weaken significantly the NLRA's Section 8(a)(2) restrictions on
"dominated" labor organizations. TEAM Act legislation was
passed by both houses of Congress in 1996, was vetoed by President Clinton, and
was reintroduced by its Congressional supporters. The ongoing debate engendered
by this proposed legislation, as well as that precipitated by the hearings and
final report of the Clinton-appointed Commission on the Future of
Worker-Management Relations (Dunlop Commission), have put the nonunion
representation on the front burner of the American labor policy debate.

Proponents of the law claim Sections 2(5) and 8(a)(2) are crucial to
protecting employee free choice in matters of union representation by
preventing employers from manipulating and coercing workers through
"sham" company unions. There also are those who agree that the
NLRA treatment is problematic, but are gravely concerned that a movement
to change the NLRA with respect to nonunion representation will merely
allow management to lawfully employ new techniques to defeat unions. Another
group would consider a change to the NLRA only if it was accompanied by
more sweeping reform to the Act in ways which would facilitate an easier
transition to unionization where it is desired by employees.

By contrast, Canadians are not engaged in a similar type of debate, and
so we draw upon the Canadian statutory framework for comparative purposes.
Canadian legislation, which observers would considered similar in most respects
to the Wagner Act, diverged in its treatment of nonunion representation.
Nonunion plans are legal in Canada provided they are not designed to thwart
union organizing. In Table 1 below, we blended a variety of Canadian statutes
to demonstrate the Canadian approach. At first glance, it appears that the
Canadian treatment is quite similar to the American. In Canada, it also is an
unfair labor practice for management to participate in, dominate, or interfere
with a union. A union which has been influenced by management cannot be
certified as a bona fide bargaining agent, and will not enjoy the protections
of any collective bargaining statutes. Where Canada deviates from the Wagner
Act is in the definition of a labor organization. A labor organization
means a union, or at the very least, a collective entity whose purpose includes
regulation of relations through collective bargaining. Management must not
interfere with a union, but management may deal openly with groups of nonunion
employees on any issue of concern, including the terms and conditions of
employment. It is not an unfair labor practice to run a nonunion employee
representation plan because Canadian labor boards do not have the reach given
to the U.S. NLRB through Section 2(5). The critical distinction between Canada
and the U.S. rests in the definitions sections of the statutes, and not in any
departure from the Section 8(a)(2).

Statutory Treatments of Nonunion Representation in the U.S. and
Canada [Text Version]

Statute

Definition

Prohibition

National Labor Relations Act
(Wagner Act, 1935)

Section 2(5). A labor organization is
any organization of any kind, or any agency or employee representation
committee or plan in which employees participate and which exists for the
purpose, in whole or in part, of dealing with employers concerning grievances,
labor disputes, wages, rates of pay, hours of employment, or conditions of
work.

Section 8(a)(2). It is an unfair labor
practice for an employer To dominate or interfere with the formation or
administration of any labor organization or contribute financial or other
support to it.

Railway Labor Act (1926)

Section 1.Representatives
means only persons or entities designated either by a carrier or group of
carriers or by its or their employees to act for it or them.

Section 2(2). Representatives for both
management and labor shall be designated by the respective parties and
without interference, influence, or coercion by either party over the
designation of representatives of the other; and neither party shall in any way
interfere with, influence, or coerce the other in its choice of
representatives.

Section 3(4). It shall be unlawful for any carrier to interfere in
any way with the organization of its employees, or to use the funds of the
carrier in maintaining or assisting or contributing to any labor organization,
labor representative, or other agency of collective bargaining.

Canadian Approach (blending 12
statutes: federal, public service, and 10 provincial labor codes) --
[information about each of these codes is found inAppendix 2 in this paper]

Definitions Sections: Trade
union, Bargaining agent, Union, Association
of employees, or labor organization means an entity that has
as one of its purposes the regulation of relations between employers and
employees through collective bargaining.

Unfair Labor Practice Sections: It is
an unfair labor practice for any employer or employer representative to
participate in or interfere with the formation or administration of a trade
union, or representation of employees in a trade union.

Prohibitions against Certification Sections: Labor boards (or in
Quebec, the commissioner-general) shall not certify a trade union if it is
employer dominated.

This Canadian-American difference motivated an intensive investigation
of nonunion employee representation (NER), including its contemporary features
and public policy treatment. We found that there are some elements of NER on
which there never will be consensus. These include whether nonunion employee
representation plans (NERPs) are substitutes to unions, complements to unions,
or make up a free-standing system of industrial relations occupying a different
domain of activities. The impact of NER on union organizing remains
speculative. These issues form the molten core of controversy that necessarily
ensues when any group of industrial relations scholars and practitioners
exchange their views on the desirability of nonunion representation.

There also are three major issues on which agreement virtually leaps off
the page, regardless of the perspective of the authors. These include (1) that
nonunion representation is not an easy human resource practice: it is costly
and creates dynamics that make it difficult to manage. In instances where NERPs
do indeed substitute for unions, they may well be more cumbersome and
challenging than the vehicle they are meant to displace. (2) Enduring nonunion
representation plans always match or exceed employment conditions in unionized
firms. Senator Wagners view that they result in a nibbling of the
meanest man, an inevitable deterioration of an industrys wage
contour, has no empirical support. (3) The contemporary American public policy
debate is misdirected. The controversy over loosening Wagner Act
restrictions has erroneously fixated around Section 8(a)(2), which details
employer interference with labor organizations as an unfair labor practice.
Section 8(a)(2) is not now, and never has been the problem. The opinion that
we, and a majority of authors in our book espouse, is that Section 2(5) - the
overly broad definition of a labor organization - is the crux of the perplexing
American statutory treatment.

The next (second) part of this paper reviews the empirical findings on
nonunion representation, and summarizes both the points of agreement and the
reasons for the American controversy about legalizing nonunion representation.

Despite the Wagner Acts ban on NERPs via Section 2(5) and
Section 8(a)(2), nonunion plans have made significant inroads into the American
industrial relations landscape. The third part of this paper demonstrates that
a number of American employers -- perhaps about 20% of all nonunion employers,
and about 50% of those nonunion employers implementing employee involvement and
participation programs, if we were pressed to put a raw figure to our
impressions and the available data -- are practicing forms of nonunion
representation that are contrary to the express language of the NLRA.

The fourth, and final, section of this paper addresses the public policy
changes that we recommend in order to allow for collective action by nonunion
employees without further jeopardizing the low levels of unionization. It is
noteworthy that neither Canada nor Japan banned nonunion representation. In the
fourth section we draw upon the Canadian statutes for a different approach to
the Section 8(a)(2) dilemma than has been previously proposed by
American employer lobby groups (e.g. the TEAM Act). Because we have
found from our research that nonunion systems operate best when they exist in
the shadow of a viable union threat, we believe it is vital that any softening
of the nonunion representation ban be accompanied by changes that increase the
ability of workers to join bona fide unions.